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Fred's Posts Dismal Comparable June Store Sales, Stock Down
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Fred's, Inc. , which has been struggling to recover from the blow of a failed merger between Rite Aid Corporation and Walgreens Boots Alliance, Inc. (WBA - Free Report) , recently announced soft June comparable store sales (comps). This extinguished hopes of a comeback, dampening investor spirits which is evident from the 13.2% decline in the stock’s value.
Total comparable store sales (comps) for June declined 1.6% compared with a 1.3% decrease recorded in the year-ago period. The decline came after posting an increase of 0.8% and 1.2% in May and April, respectively. Fred’s has not been able to continue with the positive comps trend for the reported month. Lower sales led to discontinuation of inventory productivity and adversely impacted comps for the month under review by approximately 0.9%.
Fred’s, which shares space with CVS Health Corporation (CVS - Free Report) , hinted that comps for the month of June were lower than what they had previously anticipated. Sustained headwinds in consumables categories impacted Front Store sales. The same was also affected by lower seasonal sales during summer, primarily due to cooler than average temperatures. The favorable results in Retail and Specialty Pharmacy businesses, which delivered an increase of 3.5%, raised investor’s confidence. The company remains optimistic about the recent introduction of beer and wine in select stores, based on their early results.
Fred’s reported a year-over-year decline of 2.7%, 3% and 3.1% in net sales during March, April and May, respectively. The company’s total sales for June declined 5.3% to $197.5 million. The fall in sales can be attributed to the closure of 39 underperforming stores in the first quarter of 2017. Continued challenges in the Front Store business also impacted sales.
Bottom Line
Going forward, management stated that it no longer expects sequential improvement from the first quarter. Current headwinds combined with lower-than-expected sales in June would impact the second quarter results. Nevertheless, the management would continue to execute their transformation strategies, which includes optimizing supply chain and store fleet and improving their pharmacy business, to drive scripts.
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Fred's Posts Dismal Comparable June Store Sales, Stock Down
Fred's, Inc. , which has been struggling to recover from the blow of a failed merger between Rite Aid Corporation and Walgreens Boots Alliance, Inc. (WBA - Free Report) , recently announced soft June comparable store sales (comps). This extinguished hopes of a comeback, dampening investor spirits which is evident from the 13.2% decline in the stock’s value.
We observed that Fred’s shares have underperformed the Zacks categorized Retail-Discount & Variety industry over the past three months. During the said time frame, shares of this Zacks Rank #4 (Sell) company plunged 58.7% compared with the industry’s decline of 6.4%.You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Dismal Comps Performance
Total comparable store sales (comps) for June declined 1.6% compared with a 1.3% decrease recorded in the year-ago period. The decline came after posting an increase of 0.8% and 1.2% in May and April, respectively. Fred’s has not been able to continue with the positive comps trend for the reported month. Lower sales led to discontinuation of inventory productivity and adversely impacted comps for the month under review by approximately 0.9%.
Fred’s, which shares space with CVS Health Corporation (CVS - Free Report) , hinted that comps for the month of June were lower than what they had previously anticipated. Sustained headwinds in consumables categories impacted Front Store sales. The same was also affected by lower seasonal sales during summer, primarily due to cooler than average temperatures. The favorable results in Retail and Specialty Pharmacy businesses, which delivered an increase of 3.5%, raised investor’s confidence. The company remains optimistic about the recent introduction of beer and wine in select stores, based on their early results.
Fred’s reported a year-over-year decline of 2.7%, 3% and 3.1% in net sales during March, April and May, respectively. The company’s total sales for June declined 5.3% to $197.5 million. The fall in sales can be attributed to the closure of 39 underperforming stores in the first quarter of 2017. Continued challenges in the Front Store business also impacted sales.
Bottom Line
Going forward, management stated that it no longer expects sequential improvement from the first quarter. Current headwinds combined with lower-than-expected sales in June would impact the second quarter results. Nevertheless, the management would continue to execute their transformation strategies, which includes optimizing supply chain and store fleet and improving their pharmacy business, to drive scripts.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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